May 10 (Bloomberg) -- The Democratic Republic of Congo lost
out on about $1.4 billion in revenue by selling undervalued
copper and cobalt deposits now controlled by Glencore Xstrata
Plc and Eurasian Natural Resources Corp., a group led by former
United Nations Secretary-General Kofi Annan said.

The figure represents a “small share” of overall losses
as state-owned companies underpriced assets they sold to
companies owned by Israeli billionaire Dan Gertler between 2010
and 2012, the 10-member African Progress Panel said in a report
released at the World Economic Forum on Africa in Cape Town.

Glencore, ENRC and Gertler deny any wrongdoing.

“Privatization of the DRC’s minerals sector has been
plagued by a culture of secrecy, informal deals and allegations
of corruption,” today’s report said. “Concessions have been
sold on terms that appear to generate large profits for foreign
investors, most of them registered in offshore centers, with
commensurate losses for public finance.”

Congo’s losses point to a continent-wide ailment in which a
resources boom is widening inequality and growth in joblessness,
rather than spreading dividends amongst the population, the 119-page report said.

Gertler, who describes himself as a close friend of Congo’s
President Joseph Kabila, has entered into joint ventures with
companies including Glencore and ENRC since arriving as a
diamond trader in 1997. The failure by state-owned companies to
publish some of those deals prompted the International Monetary
Fund in December to stop a loan program to what the World Bank
ranks as the least developed country in the world.

Commercial Secrecy

“The complex structures of interlocking offshore
companies, commercial secrecy on the part of major mining
companies, and limited reporting by state companies and
government agencies to the DRC’s legislators, creates what
amounts to a secret world,” the report said. “A world in which
vast fortunes appear to be accumulated at the expense of the
DRC’s people.”

The Annan panel’s report contains “basic errors, selective
information and repeated the same old, disproven allegations”
against Gertler and his Fleurette Group, the company said.

“The Fleurette Group is the biggest taxpayer in the DRC
and has generated substantial inward investment, created tens of
thousands of jobs and is the country’s largest, long term
investor,” it said in an e-mailed statement.

ENRC Response

ENRC said in an e-mailed statement that all its
acquisitions since its 2007 initial public offering “followed
appropriate regulatory and board best practice and were cleared
by a committee of non-executive directors, led by our former
Executive Chairman Mehmet Dalman, alongside the professional
advisers whose approvals for these transactions is mandatory.”

Glencore has invested more than $3.3 billion in two
minining projects in DRC and has created almost 10,000 jobs in
the country, it said in an e-mailed statement today.

The 10-member panel includes former International Monetary
Fund Managing Director Michel Camdessus, former Nigerian
President Olusegun Obasanjo and musician Bob Geldof.

While the size of sub-Saharan Africa’s economy has more
than tripled since 2000 to about $1.33 trillion last year, more
than half its 1 billion people live on less than $1.25 a day,
World Bank data shows.